Stagnant UK growth fails to weaken pound

Philip McHugh December 11th 2019 - < 1 minute read

  • Pound holds onto gains in spite of stagnant UK growth
  • Canadian dollar under pressure as economic anxiety lingers
  • US dollar looks to FOMC decision for guidance

Election jitters cap pound gains
An unexpected stagnation in the UK’s monthly gross domestic product failed to put the pound under pressure yesterday.
While signs continue to point towards a weaker fourth quarter for the UK economy, bets that the general election won’t end with a hung parliament supported GBP exchange rates.
However, the pound could soften today as political jitters increase ahead of tomorrow’s vote.
Signs of weakening production could extend Canadian dollar losses
Although reports suggested that the US is preparing to delay its planned December tariffs on Chinese products the risk-sensitive Canadian dollar remained on the back foot yesterday.
Worries over the underlying health of the Canadian economy could increase this afternoon if the third quarter capacity utilisation index weakens as anticipated.
Unless the data can deliver a positive surprise the Canadian dollar looks set to trend lower.
Fed rate decision ahead
A solid uptick in the latest NFIB small business optimism index was not enough to give the US dollar much of a boost on Tuesday.
With anticipation mounting ahead of this evening’s Federal Open Market Committee (FOMC) interest rate announcement the potential for USD exchange rate gains proved limited.
Although no change in interest rates is expected at this stage, any hints that the Fed will resume cutting rates in 2020 would be USD-negative.
Upcoming Data:
Wednesday, 11th December 2019
13:30 CAD Capacity Utilisation
13:30 USD Consumer Price Index
19:00 USD Federal Open Market Committee Rate Decision

Written by
Philip McHugh

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